Majority of small, medium businesses use NAFTA to save costs, yet remain dangerously passive as to its outcome

This article was originally published on April 17, 2018 in the Financial Post, Montreal GazetteSaskatoon Star Phoenix, Regina Leader Post, Windsor Star, Ottawa Citizen, Calgary Herald, Edmonton Journal and Vancouver Province.

By Stéphan Galarneau, Head of Small Business, Livingston International

Businesses invested in cross-border trade with the U.S. are by now all too familiar with the feeling of sea sickness that has come from the highs and lows of the ongoing NAFTA negotiations.

It seems every few weeks, optimism turns to pessimism and back to optimism again before retreating into a temporary information vacuum, and then resurfacing as either optimism or pessimism, depending on one’s industry or market segment.

U.S. multinationals that have invested heavily in continental supply chains over the years have been carefully watching the NAFTA talks with hopes of a successful renegotiation that leaves the core tenets of the agreement unaltered.

Small businesses, however, seem to be taking a dangerously passive approach to the negotiations. Even among those that use NAFTA, there appears to be a sense of fatalism with regard to the beleaguered trade deal.

A recent study by Livingston International of businesses that use NAFTA shows 80 per cent of small businesses use the trade deal to achieve cost savings for all or most of their cross-border transactions. In addition, just less than half believe a U.S. withdrawal from NAFTA would have a very negative effect on their industry and half believe it would have a very negative effect on their individual business. So one would presume the fate of NAFTA would be of high importance.

Not so. The same study shows only 15 per cent of small businesses and 16 per cent of medium-sized businesses are closely following the negotiations, and are aware of the key issues and potential outcomes. Most (85%) are either casually following the NAFTA talks or not following them at all. Furthermore, only six per cent of small businesses and four per cent of medium-sized businesses say they have contingency plans in place for a U.S. withdrawal from NAFTA.